On next Wednesday, April 30th, the Argentinian Senate shall deal with bill on registered employment promotion and employment fraud prevention, promoted by the executive power. This project has already obtained the majority decision at the High Chamber commissions’ plenary.

The Employment Minister, Carlos Tomada, mentioned that the project aims to “continue what started on May 2003, by expanding rights and including those people who nowadays belong to excluded and vulnerable sectors”.

Tomada established that “it has been confirmed that even after ten years of the paradigm been changed, around 40% of formal companies keep their employees unregistered”; he also stated that” the unregistered employment index reaches 33% of employees”.

In addition, the Minister highlighted that “we need to work on formal and competitive companies so that they formalize unregistered employment”.

The projects creates the Public Register of Employers with Labor Sanctions, which shall include every company that does not register its’ employees, that hires children or teenagers outside legal boundaries and/or that incurs on people trafficking for enforced employment.

Companies having infractions, besides receiving the corresponding sanctions, shall be included in such Register, and restrictions will fall on them that go from the cancelation of State subsidies to loosing tax benefits.
Moreover, AFIP’s sanctions on matters of unregistered labor as well as those applied by the National Register of Agrarian Workers and Employers, shall be included.
The fundamentals of the project warn on the fact that during the period of time sanctioned companies appear in the Register “they will neither be able to have access to development, benefits or subsidies’ programs financed by the State nor establish contracts with the latter “. “Furthermore, they will not be allowed to obtain credits from public banks”.

The project also widens two currently extent tools that seek to promote formal hiring.

For instance, Act 26.476, which provides benefits for hiring new employees, will included greater incentives to small companies.

It also includes the Conventions on Trades Co-responsibility, a tool that through an agreement between companies and unions’ chambers, eases the registration of agro activities characterized for their important seasonal variation.

Likewise, the initiative creates a Regime for Special and Permanent Contributions to Social Security for Micro-businesses with Lower Levels of Productivity and Competitiveness.

This regime reaches companies with no more than 5 employees, which are not “sociedades anónimas” and have up to a certain level of annual invoicing. For such companies there shall be a permanent reduction of 50% for employers’ contributions and a limit on the number of fees ART’s may charge in the sector.

Companies that have up to 15 workers shall have a transitory regime for the creation of new Jobs that implicates a reduction on social security taxes; similarly, another scale will be applied on companies that have from 17 to 80 and over employees.
The target of this initiative is to facilitate formal employment registration and to reduce the current unregistered rate which is on 34, 5% to 28%. These series of measures have an initial cost of 4.150 million pesos on employers’ benefits. 65% of that money is destined to micro-companies which correspond to 50% of formal employers.

In Argentina, there are two bills that have not been treated in order to ratify ILO’s Convention no.181 on private employment agencies. This ratification would allow regulation and control over every legal entity that provide “services aimed to relate employment’s supply and demand”. Besides, this Convention would modernize public employment services and, as ILO encourages, it would allow both, private employment agencies and public employment services to develop policies on employment training towards what the demand requires. For serious companies within the sector, this would mean the ending of disloyal competition generated by companies that have no legal certifications to operate. As the ILO establishes, these kind of companies promote informality, damaging the image and reputation of a sector that creates decent work.

For young Argentinians, these companies are the main entrance towards formal labor market, becoming great opportunity sources for gaining labor experience and a real chance that goes around 40% to become permanent staff of the user company. A similar situation occurs with vulnerable workers, which register high informality rates. These companies still have a restricted field of action, as they cannot operate in the Construction and Rural work sectors, both of which have elevated un-registered employment rates.

Every country where this ILO convention was ratified has empiric evidence that workers are more protected and that employment informality has been notoriously reduced.

This ambitious bill shall only be complete if Convention no.181 is ratified. This way, the target of an employment informality rate below 28% shall be achieved, in a market that tends to be more formal, modern and inclusive.